CIPS Exam L4M8 Topic 6 Question 59 Discussion

Actual exam question for CIPS's L4M8 exam

Question #: 59
Topic #: 6

[All L4M8 Questions]

Describe three ways in which a buyer could or test the market in other to assist with determining a need.

AExplanation:
Once the need has been understood, defined, justified and authorized, the next stages are to analyze and test the market. Analyzing and testing the market includes looking at the following
1. STEEPLE analysis
2. SWOT analysis
3. Porter's five forces
4. Level of suppliers competition
5. Supply and demand
6. Push and pull
7. Supplier segmentation
8. Product life cycle
9. Ansoff matrix
10. Early supplier involvement
11. Make or buy
12. Offshoring
1. Porter's five forces: The use of porter's five forces helps the procurement professional to understand the level of competition within the marketplace. Whether it is a monopoly, oligopoly, imperfect or perfect market. Knowing these will equip the organization to better negotiate a favorable price.
2. Supply and Demand: the procurement professional must also think about supply and demand as part of their market analysis when they receive a requisition. This economic factor has a significant effect on the prices charged and on the cost incurred.
3. Supplier segmentation: in this the procurement professional start to form an opinion of potential suppliers.. They can segment current suppliers into four categories, depending on their level of integration into an organization. This can help to inform the procurement professional of which type of supplier relationship that would be most appropriate.

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Suggested Answer: A

by Nadine at Jun 12, 2025, 11:47 AM

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2 months ago

Supplier segmentation, eh? I hope I don't get stuck in the 'high maintenance, low volume' category. That sounds like a recipe for a headache.

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Ciara

1 months ago

User 2

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Shalon

2 months ago

User 1

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Ines

2 months ago

I agree, understanding the level of competition is key to negotiating a good price.

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Aliza

2 months ago

Wait, did they really just throw in 'make or buy' at the end there? Talk about a curveball. I'm going to have to call my accountant friend for a crash course on that one.

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2 months ago

I think analyzing the market through Porter's five forces is crucial.

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